Budget 2026: FM announces customs duty exemption on capital goods for battery storage

Union Budget 2026: Presenting the Union Budget 2026 on 1 February, Finance Minister Nirmala Sitharaman announced that the government would extend and expand tax breaks on the essential machinery and raw materials required for advanced battery production.

Sitharman announced customs duty exemptions aimed at bolstering the domestic electric vehicle (EV) and renewable energy sectors.

A central pillar of the announcement is the continuation of customs duty exemptions on capital goods used in the manufacturing of lithium-ion cells. In a strategic shift, this relief has now been extended to include equipment for manufacturing lithium-ion cells used in Battery Energy Storage Systems (BESS).

"I propose to extend the basic customs duty exemption given to capital goods used for manufacturing Lithium-Ion Cells for
batteries, to those used for manufacturing Lithium-Ion Cells for battery energy storage systems too." Sitharaman said.

This move is designed to support not only the transport sector but also the wider power grid, as the country looks to store renewable energy more efficiently.